Performance Management A guide to help you explore some important considerations about performance measurement within your business Performance management is a broad term and can be said to incorporate any activity that seeks to assess whether goals or objectives are being met, be that in relation to an individual, or with regard to business performance. Results management is a process not a one-off event because it should be ongoing in any business with a range of inter- linked activities taking place which are designed to capture how the business is performing from a variety of perspectives. Performance Management This guide is designed to highlight some important considerations about performance measurement within your business and covers the following content: 1. Introduction .................................................................................................................. 3 2. Measuring People Performance ............................................................................... 4 2.1 Clarify expectations.................................................................................................................... 4 2.2 Training and Support ................................................................................................................. 5 2.3 Ongoing Supervision and Feedback ............................................................................................. 5 2.4 Formal Performance Reviews...................................................................................................... 5 2.5 People measures ....................................................................................................................... 6 Activity 1 – Review your current approach to measuring people performance ..................................... 6 3. Measuring Business Performance ........................................................................... 7 3.1 The Balanced Scorecard ............................................................................................................. 7 Activity 2 – Review your current approach to measuring business performance ................................... 9 4. Conclusion ...................................................................................................................... 9 2 1. Introduction For some time, it has been recognised approach which provides you with as that no one performance measure can holistic a view of business performance adequately meet all management as possible. But what to measure? To feedback and analysis needs in a answer that question it is useful to competitive environment, and as such, reflect again upon the broader strategic you need to adopt a measurement management process: Strategy Strategy Evaluation Formulation Strategy Execution That’s a fairly simplified strategic management model but it’s helpful to inform the discussion as to what you want to measure: Strategy Formulation and Evaluation – as a result of your strategic planning process, you will have defined your strategic goals, set strategies, and agreed plans to achieve them. Clearly, as part of any results/performance management model, you will want to know whether your plans are working and if you are heading towards your goals. Strategy Execution – strategy in any business is executed through its people and the process deployed, so clearly you will want to know how productive and effective your people are, as well as how well your processes are performing. 3 As a result of this rudimentary review of what the result was at the end of a the strategic management process, you given period and tracking measures can say that in any business there is or indicators - which tell you what is need to measure the performance of happening on an ongoing basis. your people, processes and results. Of course, an additional question arises Across these three dimensions, it is here and that is when to measure? The possible to get very bogged down in answer to that is all the time, as you trying to describe the different types of need to keep an eye on the indicators to measures you can have within each, but make sure you are on track, otherwise in straightforward terms you will want to you will not achieve the desired have both financial (e.g. revenue and outcomes. Your measurement intervals costs) and non-financial (e.g. customer can consequently be said to be daily, and employee satisfaction) and within weekly, monthly, quarterly and annually these categories you will have both depending upon what measures you are outcome measures - which tell talking about. 2. Measuring People Performance Measuring people performance is not 2.1 Clarify expectations always easy as there is no ‘one-size-fits- all’ approach which can apply to all It is not possible to fairly or objectively businesses. However, regardless of the measure someone’s performance if they nature or size of your enterprise a are not 100% certain as to what is number of key activities apply to the expected of them in the first place. measurement of people performance From an employee’s perspective, this is and these are addressed below. partially achieved through providing them with a detailed Job Description, Of course, carefully matching people to but you must ensure that on a available positions as part of your continuous basis you, and your recruitment process could be said to be individual managers, provide your the first step in this regard because if employees with clear and concise you select employees who represent the instructions. Where possible, you should best fit with your business, then they also set specific individual targets for will likely deliver better performance, your employees so that there are and that will be positively reflected in concrete measures in place to help you the measures. gauge their performance. 4 In addition, setting team-based responding in an aggressive manner, performance targets (perhaps related to but it does mean confronting issues their process) can be useful to help you when they arise in the appropriate monitor how the team is performing as manner relevant to the problem and the a unit. person involved. As part of this ongoing monitoring of employee performance, At a management level you should individually and collectively, they should specify in great detail what you require receive constructive feedback on a from your managers and one way of regular basis and platforms such as job doing so is through the development of chats and team briefings are designed a Leadership Competence Framework to facilitate this process. which defines not only what they must do, but what they must achieve in terms At a management level, apart from of specific targets and results. You can keeping an eye on their general find further information on this in the performance, this ongoing monitoring Leading your Organisation online guide. will of course also be based on the specific targets you have set for them Other ways of clarifying expectations for personally, as well as those targets all employees are through established for the process they own. communication tools such as your codes of conduct, policies and procedures, and standards of performance. 2.4 Formal Performance Reviews 2.2 Training and Support This activity is at the heart of measuring Of course, you cannot expect individuals individual performance and all employees in your business should to perform to the optimum if you do not receive a structured and comprehensive invest in training and development so that they continuously enhance the skills appraisal at least once, if not twice and competences necessary to achieve annually. For employees, this should be the targets set for them. A section in the based on defined criteria relevant to Getting the Most from your Employees their job description as well as on measuring how they performed against online guide is devoted to this issue. any individual targets or objectives In addition to developing your managers agreed for them. For managers, the and employees, you must also provide appraisal should be centred upon the them with the necessary support, and leadership competence framework and where appropriate, resources, in order the personal and process-related targets established for them. The performance to help them deliver on expectations. review system tells you how each individual employee in the business is 2.3 Ongoing Supervision and performing against expectations. Feedback You can of course measure the An important element in measuring effectiveness of teams as a whole by performance as it applies to your people setting team-based targets and has to do with ongoing supervision. reviewing measures relevant to the When an employee, at any level, process for which they are responsible. underperforms then this must be This of course is something you do addressed because a failure to do so anyway, but will grow in importance in sends out the wrong signal to them and terms of managing processes for best to others. Naturally, this does not mean effect. 5 2.5 People Measures sensitivity and good management practices and the key activities To measure the performance of the highlighted above will ensure that you ‘people’ function overall you need to have a strong handle on how your track results such as Employee Turnover employees are performing, individually (overall and by department) and and in teams, as well as the trends in Employee Satisfaction levels (overall and the people function overall. by department). For the latter, this